CM – S&P / TSX Composite down, Loonie down after Bank of Canada warned of risk

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The Canadian press
Employee

TORONTO –
Canada’s top stock index fell on economic growth worries, while the loonie fell after the Bank of Canada warned of risk but left interest rates unchanged.

The latest Federal Reserve’s business conditions survey, dubbed the « Beige Book, » indicated slower economic activity in July and August, mainly related to growing concerns about COVID-19 variants.

September is a seasonally weak time of year, while a slowdown is raising concerns for businesses that have made slight comparisons compared to last year when activity was suppressed by the virus.

« Those are things that should be understood by the market in general, but when they come out you will certainly see pressure on stocks and that is what we are seeing today, » said Mike Archibald, Vice President and Portfolio Manager at AGF Investments Inc.

In New York, the Dow Jones industry average fell 68.93 points to 35,031.07 points. The S&P 500 index lost 5.96 points to 4,514.07, while the Nasdaq composite lost 87.69 points to 15,286.64 points.

The S&P 500 was in the red for the third year in a row, possibly a signal that buyers are getting tired after markets rose about 20 percent this year, Archibald said in an interview.

“I’ve been expecting for a while that we would see a consolidation in the market. It did not happen. So maybe we get to a point where the buyers just spent all their money and they are. I’m just going to be a little patient here and let’s just see what happens in the days ahead, « he said.

Archibald described the midweek decline as a « run-of-the-mill pullback » expected by the equity markets.

« It’s not that we’re getting a really big correction here. It’s just a small, broad-based weakness in the broader equity markets. »

The technology sector was also weaker, losing 1.3 percent. A report on Amazon developing a third-party point-of-sale system pushed Shopify Inc. down 3.6 percent and Lightspeed down 1.8 percent.

Energy lost almost one percent, despite the rise in crude oil prices and the price of natural gas climbing to their highest level in seven years.

The September crude oil deal rose 95 cents to $ 69.30 a barrel and the October natural gas deal rose 35 cents, or 7.6 percent, to $ 4.91 per mmBTU.

That helped Tourmaline Oil Corp., which rose 2.4 percent, while shares of Crescent Point Energy Corp. 2.9 percent lost.

Natural gas prices were supported by inventories for the coming winter after a hot summer that increased the use of air conditioning.

« As stocks run out, there could be a shortage in the winter season, so you’ve seen a big surge in natural gas prices to seven-year highs, » Archibald said.

The loonie fell after the Bank of Canada warned of risk, despite leaving its rate unchanged. The Canadian dollar traded at 78.89 US cents, compared to 79.23 US cents on Tuesday.

The central bank warned of the fourth wave of the pandemic and supply shortages could weigh on economic recovery. However, she continues to assume that the economy will recover in the second half of the year.

Archibald doubts that Bank Governor Tiff Macklem will say much during a speech on Thursday as the country is in the middle of a federal election.

« He doesn’t want to politicize about central bank policy, but it seems likely to me that they will likely lower growth forecasts in Canada after the election. »

Materials fell 1.1 percent, First Quantum Minerals Ltd. by 7.5 percent and Hudbay Minerals Inc. by 6 percent.

The December gold contract was down $ 5.00 to $ 1,793.50 an ounce and the September copper contract was down 4.9 cents to $ 4.23 an ounce.

Healthcare declined 2.8 percent as Canopy Growth Corp. lost six percent.

A forex trader gesticulates on Thursday, March 4, 2021, in the currency trading room of KEB Hana Bank in Seoul, South Korea. (AP Photo / Ahn Young-joon)

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